automotive management services, a.s.b.c.a. (2014)

7/25/2019 Automotive Management Services, A.S.B.C.A. (2014)

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ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeal of --

Automotive Management Services

Under Contract No.

W52PIJ l

l-C-0014

APPEARANCE FOR THE APPELLANT:

)

)

)

)

)

APPEARANCES

FOR

THE GOVERNMENT:

ASBCA No. 58352

James W. Kim, Esq.

McDermott Will Emery LLP

Washington, DC

Raymond M. Saunders, Esq.

Army

Chief

Trial Attorney

MAJ Nancy J. Lewis, JA

Trial Attorney

OPINION BY ADMINISTRATIVE JUDGE DELMAN ON

CROSS-MOTIONS FOR SUMMARY JUDGMENT

This appeal arises under a contract to Automotive Management Services (AMS or

appellant) for the repair and maintenance of vehicles in Afghanistan. The parties have

filed cross-motions for summary judgment, each contending it is entitled to judgment as a

matter of law based upon its interpretation

of

the contract. According to appellant, it is

entitled to reimbursement for the costs incurred to deliver Class IX spare parts from its

central warehouse in Kabul to the contractually prescribed work sites in Afghanistan

under contract line item number (CLIN) 0005AA, Spare Parts. According to the

government, appellant is not entitled to separate reimbursement for these costs, since they

are included in a firm fixed-price (FFP) effort under the provision for supply chain

management in the Performance Work Statement (PWS) of the contract. We have

jurisdiction under the Contract Disputes Act (CDA),

41

U.S.C.

7101-7109.

STATEMENT OF FACTS (SOF) FOR PURPOSES OF THE MOTIONS

1. On or about 26 November 2010, the U.S. Army Rock Island contracting center

(Army or government) issued a draft solicitation for a project to provide,

inter alia

maintenance and support to the vehicle fleet

of

the Ministry

of

Interior/Afghanistan

National Police (MOI/ANP) at various maintenance locations in Afghanistan, through the

Afghanistan Technical Equipment Maintenance Program (A-TEMP) (R4, tab 1 .

1

1

The draft solicitation also included vehicle support for the Ministry of

Defense/Afghanistan National Army (MOD/ANA). The contract before us was

awarded to support the MOl/ANP only.


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2

Insofar as pertinent, the draft PWS dated 26 February 2010 stated

as

follows:

3.25 OBJECTIVE-THREE 3). MOI/ANP FLEET

MAINTENANCE. The contractor will be responsible for

providing all the management, expertise, personnel,

equipment, tools, vehicles, fuel, security, and life support

to perform the requirement. The contractor shall provide

equipment maintenance and supply chain management for

the MOI/ANP fleet. ... The supported fleet density by

equipment type

is

defined in ANNEX

2

Required level

o maintenance and locations o sites are defined in

ANNEX3.

3

25

1 Tasks associated include the following:

3.25.1.8

Manage a repair parts warehouse to include

distribution ofrepair parts.

3.44 SUPPLY CHAIN MANAGEMENT.

Contractor shall

provide a commercially available supply chain

management system.... The contractor shall manage a

supply warehouse; operate class IX parts procurement and

requisitioning program. The supply chain management

program shall include a viable distribution program for

repair parts to each maintenance site....

ll

costs of

providing the warehouse facility as well as the

management and personnel portion

of

his requirement

shall be a firm fixed price effort ...

3.46 PARTS PROCUREMENT. The contractor shall not

add any costs, additional fees, mark ups, company derived

inflation costs, or any other factor that changes the item s

actual retail cost. For price comparison purposes, and i

there is a dispute between the USG and contractor, the

ACO shall determine i a source is appropriate. The

requirement for premium freight costs for mission

2


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essential equipment must be validated in advance by the

COR. The contractor shall seek fair and reasonable

prices .... The contractor shall consider freight and/or

delivery fees when evaluating prices. When requesting

quotes, the contractor should select suppliers who provide

quality products at fair and reasonable prices and

consistently deliver items on time.

(Supp. R4, tab 1 at 14, 18, 19) (Emphasis added)

3. After the draft PWS was issued, the government issued A-TEMP INDUSTRY

QUESTIONS AND ANSWERS 05 MAY 2010 (Q&As) that provided government

responses to questions of potential offerors (R4, tab

15

at 17). One Q&A stated the

following:

78. QUESTION: In section 3.2.2 [sic]

of

the

PWS

it states a

direct pass through on parts, which appears to be in conflict

with section 3.44 of the PWS. Is shipping approval required

for mission essential parts? Are the parts/shipping CLINs

FFP

orT&M?

ANSWER: Premium shipping cost must

be

approved.

Established ASL will be transferred as part of GFE.

Parts/shipping are [sic) non fee bearing cost reimbursable.

Id.

at 30) (Emphasis added) Neither the question nor the answer explained the term

parts/shipping. Per the Declaration

of

the Procuring Contracting Officer who provided

the answer: The Government was uncertain what the question was referring to.

However, it was her understanding that the question sought clarification concerning the

the shipping costs to the contractor. (Govt. mot., ex. 1

i

6). Per the Declaration of

appellant' s contract compliance officer, he relied on this Q&A and other solicitation

materials to price its offer such that the shipping

of

parts within Afghanistan were to be

paid on a cost-reimbursable basis (app. mot., ex. 1 iii 3, 4, 5).

4. On or about

15

July 2010, the government published the solicitation with a

revised PWS. This

PWS

was again revised prior to award (R4, tab 2). While there

appear to be some changes in pagination and section numbers amongst these various

versions of the PWS, the parties have not brought to our attention any material

differences between them with respect to the key PWS provisions above. (But we do

note a post-award change to the PWS that may have significance (SOF i

9 infra)).

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5. AMS submitted a proposal in response to the solicitation. AMS s proposal

stated as follows:

1.4.2.13 Parts Procurement PWS 3.45, 3.47)

The CMSF-SCM office in Kabul will utilize our reliable

international procurement channels in the Middle East,

United States, Europe and Asia. This will enable us to obtain

competitive prices for quality products with on-time delivery.

Upon arrival at the CMSF-SCM receiving area, all Class IX

parts will be checked against the packing list and invoice.

Parts are then sorted by location/site code[.] [D]uring this

receiving process parts quality and suitability will be checked

before being transferred to the designated RMC delivery line.

Govt. mot., ex. 2 at 63) The proposal also stated:

Id.

at 48)

1.4.2 MOI/ANP Fleet Maintenance PWS 3.23)

We will provide all management, expertise, personnel,

equipment, tools, vehicles, fuel, security and life support for a

total of 22 ANP contract facilities

....

Further to this, we will provide the management for a supply

warehouse including procurement, storing, distribution and

accountability for all spare parts used for the ANP equipment

fleet.

6. AMS was awarded the contract on or about 30 December 2010 R4, tab 1 .

The contract was for a base period of one year with four yearly options. Per Section

A - Supplemental Information, paragraph 7, appellant was allowed 90 days to mobilize

and begin full performance. Id.)

4


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7. The contract contained

CLIN

OOOIAA Central Maintenance Supply Facility,

an FFP line item that provided as follows:

CENTRAL MAINTENANCE SUPPLY FACILITY

(CMSF)

IS AWARDED AT THE

RANGE

OF 18,000 - 18,999

DENSITY

OF

VEHICLES IN THE AMOUNT

OF

584,595.00 PER

MONTH FOR

A

PERIOD

OF

12 MONTHS

FOR ONE LOCATION ...

(R4, tab

1at6of81) Appellant's CMSF

was located in Kabul, Afghanistan.

8. CLIN 0005AA, Spare Parts, was a cost-reimbursable line item and provided as

follows:

THIS COST

REIMBURSABLE

CLIN IS FOR SPARE

PARTS

IN THE AMOUNT

OF 2,750,000.00

PER

MONTH

FOR A

PERIOD

OF

12 MONTHS

....

(R4,tab 1at11

of81)

9.

On or

about

20

April 2011, the contract

was

modified

by

Modification (Mod.)

No. P00002 to incorporate a revised

PWS

dated 11 March 2011 (R4, tabs 4-5). Insofar as

pertinent, we note that this revised PWS did not contain the language of PWS 3.25.1.8

above (SOF 2),

which

language was also contained in the

PWS

as awarded at PWS

3.23.1.8. The record is unclear as to the purpose behind this post-award change in the

PWS.

10. By Mod. No. P00008 dated

24

October 2011, the government issued a

GUIDE FOR GOVERNMENT APPROVAL OVERSIGHT

OF

CONTRACTOR

PURCHASING & INVOICING dated 28 September 2011 (Purchasing Guide) (R4,

tab 8). The record is also unclear as to the purpose behind issuing this Purchasing Guide,

and

why

it was issued roughly

10

months after contract award. With respect to the

procurement of parts, the Purchasing Guide stated as follows:

(v)

Per

the PWS, only the cost

of

parts

or

costs directly

related

to

the repair and maintenance

of

the equipment

that is in addition to

work

already included in the

contractor's firm fixed price cost, shall be purchased

against the spare parts CLIN in the contract. An example

of this type of cost would be sending a par t out for rebuild

to a local shop due to this type

of

capability not being

required at the

EMS

shop and rebuild of part is more

beneficial to the Government than purchasing a

new

part.

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Delivery

and

shipping costs are considered a cost

associated to the partpurchase. No overhead or profit

can be added to the parts purchase. ll other costs

associated to parts procurement must be included

n

the

cost

of

he contractor s firm fixed price for supply chain

management

...

(R4, tab 8 at

19

(Emphasis added) The Purchasing Guide did not define Delivery and

shipping costs.

11.

During the course of performance, AMS completed a Parts Approval Form (PAF)

to the government for review and approval of its proposed procurement of the subject spare

parts. From contract inception, this form included all transportation costs for these parts,

including in-country transport costs. Sometime during 2011, the government requested that

in-country transportation costs be segregated from actual parts costs and documented on a

Parts Approval Form - Transport Costs (R4, tab 14), where these costs were in excess

of

$3,000.00. (Stip. at 3)

12. t appears that the government approved all in-country transportation costs for

these spare parts for some unstated period of time during the base year of the contract.

(See

PAF No. 92, dated 7 September 2011, and attachments, for container movement

from Kabul to Kandahar signed by the contracting officer representative on

18

September

2011 and by the administrative contracting officer (ACO) on 21 September 2011) (R4,

tab 7 at

1 .

13.

By email to appellant dated

10

December 2011, towards the end

of

the

contract base year, the ACO advised that the government was disapproving transportation

costs under forms T007, T008 and T009, stating as follows:

(R4, tab 10)

The USG is reimbursing the freight charges for the parts that

are coming into the [sic] Afghanistan. However, once the

parts are in Afghanistan, the distribution

of

the parts in the

country

is

under the supply chain management (FFP).

According to the PWS 3.5.3 the supply chain management

program shall include a viable distribution program for repair

parts to each maintenance site

My understanding

is

that the USG has approved the

transportation fees in the past. However, that will be adjusted

accordingly with the future invoices.


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14

By email to the government dated 13 December 2011, appellant objected to

this disapproval, stating that all costs for transportation were covered in the cost

reimbursable CLIN for spare parts (0005) (R4, tab 11). Appellant submitted a more

detailed response to the government by email dated

10

January 2012, enclosing a letter to

the government dated

10

January 2011 (sic) (R4, tab 13 at 3).

15

On 5 March 2012, the Defense Contract Audit Agency issued a NOTICE

OF

CONTRACT COSTS SUSPENDED AND/OR DISAPPROVED, disapproving a total

of

$572, 100.56 that was previously billed to the government from April 2011 through

October 2011 for in-country transportation, crane rental, and container movement costs

for the moving of repair parts within Afghanistan to the maintenance sites. This Notice

stated these costs were included in supply chain management under the PWS which was

FFP, and hence were not cost-reimbursable under CLIN 0005, Spare Parts. (R4, tab

15

at

15-16)

16

On

11

April 2012, AMS submitted a certified claim pursuant to the CDA

requesting that the contracting officer (CO) issue a final decision relating to the

reimbursement

of

these costs (R4, tab 15 at 2). The claim requested reimbursement of

the disallowed invoices in the amount of $572, 100.56, and AMS reserved the right to

amend the amount requested since the performance under the contract was ongoing

id.).

17 On 12 July 2012, the CO issued a final decision denying

AMS s

claim

(R4, tab 18 at 2). This appeal followed.

DECISION

The issue before us on summary judgment

is

whether appellant 's costs to

deliver/distribute repair parts from its central warehouse in Kabul to the regional and

satellite work sites in Afghanistan are separately reimbursable under the cost-reimbursable

CLIN 0005AA, Spare Parts. According to appellant, we should interpret the contract

such that these costs, per the Purchasing Guide, are Delivery and shipping costs and

are associated to the part purchase (SOF

-r

10), and hence are reimbursable under

CLIN 0005AA. According to the government, we should interpret the contract to the effect

that these costs are part

of

the FFP supply chain management system under the PWS.

We believe the record

is

insufficiently developed to determine the reasonableness

of

the parties' interpretations and whether the contract was clear or ambiguous in this

respect. L-3 Services Inc. Unidyne Div. ASBCA Nos. 56304, 56335, 09-2 BCA

,-r34,156.

The evidentiary record

is

unclear regarding the purpose behind the issuance of the

Purchasing Guide under Mod. No. P00008

in

October 2011 and why it was issued

roughly

10

months after award. The record also does not adequately address the extent to


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which the government approved these now - disputed costs during the base year

o

the

contract; whether or not said approvals were knowing and intentional, and

i

so, whether

the parties shared, by their contemporaneous actions, a common understanding

o

what

the contract required. The record also does not address whether the issuance

o

the

revised PWS under Mod. No. P00002, and the Purchasing Guide under Mod. No. P00008

confirmed, or otherwise caused a change to the parties' understanding.

We

expect that a

better developed record will address these issues, which will aid us to ascertain the

appropriate contract interpretation.

CONCLUSION

We

conclude that on the present record neither party has shown entitlement

to

summary judgment

as

a matter o law. The parties' cross-motions are denied.

2

Dated:

6

June 2014

I concur

dministrative Judge

Acting Chairman

Armed Services Board

o

Contract Appeals

CJ

\ ? ) , ,

-

~ A

DELM N

Administrative Judge


o Contract Appeals

I concur

7\

R I ~ K L E F O R

Administrative Judge

Vice Chairman


o Contract Appeals

2

The parties' cross-motions also seek various evidentiary rulings, seeking to exclude, for

purposes

o

contract interpretation, the draft PWS, the Q&A, appellant's

transportation invoices to the government and the Declarations o witnesses

attached to the motions, on the basis that they are all extrinsic/parol evidence and

should not be considered when the contract is clear. Given our disposition

o

the motions, we need not address these evidentiary issues at this time.

8


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I certify that the foregoing s a true copy

of

the Opinion and Decision of the


of

Contract Appeals in ASBCA No. 58352, Appeal

of

Automotive

Management Services, rendered in conformance with the Board s Charter.

Dated:

9

JEFFREYD GARDIN

Recorder, Armed Services

Board

of

Contract Appeals

automotive management services, a.s.b.c.a. (2014)

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